According to the most recent forecasts of the International Monetary Fund (World Economic Outlook of October 2015), GDP growth in Sub-Saharan Africa is expected to slow from 5,2% to 3,8% in 2015 and accelerate this year to 4,3%. The slowdown is mainly attributable to the net exporting markets of hydrocarbons. It is also expected that in Sub-Saharan Africa the average inflation rate will accelerate to 6,9%, from 6,4% in 2014. The inflationary effects, especially the depreciation of the exchange rate, will also be felt this year, bringing the average inflation rate to 7,3%. During 2015, the central banks of the oil-producing and middle-income countries repeatedly raised their key rates. Considering that the effects of the large depreciation of currencies on inflation have not yet fully manifested, analysts believe that further tightening actions will be likely in the course of 2016.
Due to the structural weakness of the economy and, especially as regards middle-income economies, the high current deficit of the Balance of Payments, Sub-Saharan African currencies have a tendency to depreciate over time. This trend has been accentuated since the final months of 2014 when thecurrent commodity bear cycle. The depreciation of currencies has increased the financial vulnerability of markets where the dollarisation of economies is particularly high (Angola, Democratic Republic of Congo and Tanzania) and those with a large external debt to GDP ratio, at least by the standards of emerging economies (Angola, Ghana, Kenya and Tanzania). In many countries, the external debt to GDP ratio is expected to rise over the next two years, approaching pre-restructuring levels. During 2015, the worsening of the current balance of the Payments balance, the pressures on the State budget due to the slowdown in economic growth and the drop in revenues dependent on raw materials and, finally, the increase in public and external debt have led to widespread rating cuts in Sub-Saharan African countries, which involved, among others, Angola, Nigeria, Ghana and Kenya.
In Angola, according to preliminary data provided by the IMF, in 2014 GDP growth slowed to 4,8% from 6,8% the previous year following the decrease in the hydrocarbon sector (-2,6%) determined by the closure of some wells for maintenance which led to a 4,9% cut in the average daily extraction of oil (to 1,71 million barrels per day from 1,799 million). The non-hydrocarbons part continued to record sustained growth (+8,2%). With the new extraction sites gradually approaching full capacity, production is expected to increase by 5,5% this year and grow further in the coming years, reaching 2,26 million barrels per day in 2019. The non-hydrocarbons part, instead, it is slowing down noticeably. The IMF, as reported by Intesa Sanpaolo, he cut the GDP growth estimates at 3,5% both in 2015 and for this year, with the trend in the non-hydrocarbon part expected to slow down to 2,1% in 2015 and 3,4% in 2016.
The inflationary effects of the large depreciation of the exchange rate have not yet fully manifested themselves. An average rate of inflation is expected to be around 14% this year from an estimated 10,3% in 2015. With persistent exchange rate pressures, the Central Bank continued the restrictive action begun in September 2014 by raising the reference rate by a further 150bps (to 10,5%). With the currency under pressure, given the negative situation in the hydrocarbon market and inflation expected to accelerate further, further rate hikes are likely. In the last year, the Angolan currency, the kwanza, has lost more than a third of its value to 136 AOA : 1 USD. On the unofficial market, up to 250 kwanza are asked for 1 dollar.
In 2014, as happened in 2009, the contraction of the trade surplus (which fell to 23,6% of GDP from 33,7% in 2013) brought the current balance into deficit (3,7 billion, 1,5% of GDP) . For 2015, a further substantial reduction in the trade surplus is expected (to 15,7% of GDP) with the current deficit expected to rise to 7,6% of GDP. Foreign exchange reserves at the end of September 2015 amounted to 23,8 billion. The stock of reserves covers almost 6 months of imports and is well in excess of foreign financial needs. During 2015 the worsening fiscal and external position and the increase in public and external debt led to widespread rating cuts of Angolan currency sovereign debt, now rated B+ (from BB- previous) by S&P and Fitch and Ba2 at Moody's.
In Nigeria the measures adopted to contain the public deficit and the depreciation pressures on the currency mainly due to the collapse in oil revenues are causing a substantial slowdown in the economy. From January to September 2015, GDP growth was 3,1%, compared to 6,3% in the same period of the previous year. In 2016, the likely more limited dynamics of the non-hydrocarbons part, expected to grow at a rate of 4%, could be offset by a more contained decline than in 2015 of the extraction and refining part (-4% compared to -5,6%) , keeping GDP growth above 3%.
The average inflation rate, estimated at 9% in 2015 from 8,1% in 2014, is expected to accelerate further in 2016 mainly due to the depreciation of the exchange rate. Last November the Central Bank cut the key rate from 13% to 11% and reduced the reserve ratio from 25% to 20%. La fall in the price of oil led to strong pressures towards depreciation. After the devaluation carried out in February 2015, the authorities defended parity by introducing severe restrictions on the supply of currency and on the operations of exchange offices. However, currency restrictions have fueled a thriving unofficial market where the Naira trades at 265 against the dollar (compared to 198 official exchange rates). The relative stability of the exchange rate, in the face of high inflation, has led to a large appreciation of the real effective exchange rate, which is well above its long-term average.
In 2015 the current balance of the Balance of Payments probably reported a deficit for the first time since 2003. In the period January-September 2015, the current balance recorded a deficit of 11,4 billion dollars, compared to a surplus of 6,3 billion in the same months of the previous year. Foreign exchange reserves decreased further, reaching 29,1 billion at the end of 2015. This figure compares with an estimated foreign financial requirement of 11,1 billion in 2016, for a reserve cover ratio of 2,6. Reserves exceed the entire foreign debt (estimated at 17 billion at the end of 2015) which, however, has almost tripled compared to 2006 when the country had benefited from the debt reduction programme. Over 70% of external debt is multilateral, i.e. with international organizations supporting developing countries, as World Bank , African Development Bank. Hence the worsening of the external and fiscal position and the deterioration of the political climate led the rating agencies S&P's to cut their sovereign debt rating in March from BB- to B+ and Fitch to introduce a negative outlook on its BB- rating.
